Turnpike may be leased, not sold, ODOT chief says

Proceeds would go to infrastructure

4/15/2011

BY DAVID PATCHBLADE STAFF WRITER

ODOT director Jerry Wray, left, says a lease of the Turnpike under Gov. Kasich's plan will be different than the lease of the Indiana Toll Road.

Ohio Turnpike privatization proposed by Gov. John Kasich would involve a lease and not a sale, and would occur only with specific criteria to provide ongoing revenue for transportation improvements and to cap tolls for drivers.

That was the explanation Ohio Department of Transportation Director Jerry Wray brought to the table Thursday during one of several stops on a northwest Ohio tour to discuss the idea with local leaders.

Mr. Wray said the turnpike would not be sold to anyone and that the Kasich administration's lease concept is significantly different from that of Indiana, which in 2006 leased the Indiana Toll Road to a Spanish-Australian consortium for 75 years in exchange for a $3.8 billion up-front payment.

"There is not a preferred option at this point," Mr. Wray said while discussing the proposal during a meeting with The Blade's editorial board Thursday afternoon. "Leasing is the most talked about. We're seeking the best long-term option for Ohio."

A section in Governor Kasich's budget proposal would authorize the directors of ODOT and the state Office of Management and Budget to negotiate and enter into a turnpike lease with a private party. No specific private party is named, and Mr. Wray said there have been overtures from several potential bidders for a turnpike concession, if one became available.

While a $3 billion revenue target has come up in discussion, the ODOT director said there is no firm amount for which the turnpike might be leased. He was adamant, however, that the administration is not interested in a lump-sum lease like Indiana's and said the 75-year term Indiana agreed to is too long "in my personal opinion."

Another possibility, he said, is making the turnpike a unit of the Ohio Department of Transportation, rather than maintaining the separate Ohio Turnpike Commission.

If the turnpike were to be leased, the request-for-proposal process could take anywhere from six to 18 months to complete, the ODOT director said.

Mr. Wray pledged that proceeds from any lease would be dedicated to infrastructure improvements such as highway construction and harbor dredging and would focus on northern Ohio, through which the turnpike runs.

In northwest Ohio, such revenue could be used to widen I-75 between Toledo and Findlay, supplement federal funding for Maumee River channel dredging, and finish a modernization of the I-75/I-475 junction in Toledo, he said. ODOT is in the midst of the I-75/I-475 modernization's $64 million second phase, but the third phase, expected to be a nine-figure project, is unfunded.

Politicians' ability to keep such a pledge in the future, however, was one of several causes that James Carter, president of the Wood County commissioners, cited for skepticism Thursday after hearing the ODOT presentation.

Ohio Lottery revenue was supposed to enhance education funding in the state, but when times got tight the schools' traditional funding was vulnerable because the lottery funds were there, Mr. Carter said. Now there's the threat that state support for local governments will be easy to cut because of expected revenue from new casinos, which also was billed initially as an enhancement, he said.

"I'm not going to try to persuade my colleagues" to support this, said Mr. Carter, who represented the county commissioners at one of the closed-door meetings. "I want to hear more. I don't think anybody [at the meeting] was ready to jump right on the side" and support turnpike privatization, he said.

Among Mr. Carter's colleagues is fellow Wood County Commissioner Tim Brown, who on Wednesday issued a statement vehemently opposing turnpike privatization on the grounds that it was "bought and paid for by northern Ohioans and other users of this northern Ohio highway.''

"The Ohio Turnpike is a tremendous asset, but it is not an asset of the state of Ohio to be leased or sold so that the profits can be funneled to private business interests or other areas of the state," Mr. Brown wrote.

At the very least, he continued, any legislation to change the turnpike's status should be handled independent of other legislative business, rather than rolled into the governor's broader budget bill.

Tony Reams, executive director of the Toledo Metropolitan Area Council of Governments, listed among his concerns the potential impact on northwest Ohio's parallel highways if a concessionaire were to hike tolls enough to divert significant numbers of trucks onto other roadways.

But Mr. Wray said the availability of those parallel routes would serve -- along with a formula-based cap on fares -- as a check on any concessionaire's inclination to raise tolls high enough to drive away traffic. He noted that while Indiana officials agreed to a "noncompete" clause that forbids them to improve alternatives to the Indiana Toll Road, Ohio would not make such a promise to a private turnpike operator.

Six years ago, the turnpike commission agreed to reduce truck tolls to entice commercial vehicles away from parallel routes in exchange for an ODOT subsidy, although the decrease later was partially rescinded after that subsidy expired. The commission also has raised the speed limit twice, first in 2004 by allowing trucks the same 65-mph speed limit that cars and commercial buses already had, then again with an increase to 70 mph that took effect April 1 after being approved in December.

In late 2009, the turnpike revised its truck-fare system and, on average, raised rates while introducing E-ZPass electronic toll collection, with E-ZPass users receiving a toll discount.

Among the potential savings areas that Mr. Wray said a private turnpike operator might explore would be converting the toll road entirely to electronic fare collection, eliminating toll booths and union-represented toll-takers. Negotiating privatization with employee unions would be among the issues that would have to be addressed once state officials have legislative authority to pursue the idea, he said.

Mr. Wray said the Kasich administration has no interest in raising Ohio's motor fuel tax to pay for projects that it believes turnpike-related revenue could underwrite.

"Not in the current economic condition -- it would be a mistake to raise taxes in any form," he said.

But if federal law allowed it, Mr. Wray said, Ohio should consider placing tolls on other parts of the interstate system in the state.

Among northern Ohioans' recurring beefs about the Ohio Turnpike is that tolls originally were to have been removed once the initial construction bonds were paid off in the early 1990s. But the state legislature reneged, while the rest of Ohio pays only fuel taxes to drive comparable roads.

Mr. Wray acknowledged that history but said it shouldn't get in the way.

"What happened 20 years ago was a different animal," he said. "I'm aware of what happened then, but I don't think we should let that stop us now."

And Mr. Reams said that while there are clearly many questions to be answered before his agency, which plans transportation improvements in the Toledo area, could take a position on turnpike privatization, "it's absolutely worth looking at."

"You can't ignore it," he said. "There's an opportunity here."

Contact David Patch at: dpatch@theblade.com or 419-724-6094.

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